In the context of a personal injury claim or lawsuit, a structured settlement is an agreement whereby the responsible party-usually an insurance company-agrees to pay a specific amount to settle a claim and agrees to make regular payments over an agreed-upon period of time. Structured settlements are most common in personal injury cases with a lot of money at stake, such as catastrophic injury or wrongful death cases.
Structured settlements in personal injury lawsuits have advantages and disadvantages. If you or a loved one has been injured in New Jersey, make sure you engage the services of an experienced personal injury attorney who can give qualified advice and help you decide how best to proceed. To schedule a private meeting with the New Jersey personal injury law firm of
Mallon & Tranger regarding a personal injury lawsuit, contact us online or call us at (732) 410-6094). Your first consultation is free.
The advantages of a structured personal injury settlement include:
- The insurance company may be more open to a higher, and more fair, settlement if the entire lump-sum does not need to be paid at once.
- The Periodic Payment Settlement Tax Act of 1982 encourages structured settlements by providing certain federal tax advantages.
- Periodic payments help a family manage their finances by providing a reliable long-term source of income.
Challenges associated with structured personal injury settlements include:
- Care must be taken to ensure that the structured settlement payouts do not interfere with the recipient's eligibility for Medicare or Medicaid benefits or for other income-based assistance programs.
- It can be difficult to change the terms of a structured settlement once it is in place. If medical needs or financial needs change after the terms are agreed on, the injured person may struggle to change the terms to meet those changed needs.
- It may cause a hardship for the injured person and his or her family if the entire settlement amount is not available immediately to help pay current expenses or past-due bills.
- The injured person loses the opportunity to invest the lump-sum settlement on his or her own terms, thus losing the opportunity to make a greater profit in the long run.
Knowing the challenges and advantages of a structured settlement will help you and your family make the decision best for your unique circumstances. Structured settlements are very flexible, and with proper planning can be constructed so that they fit your needs now and in the future.
Once you have a structured settlement in place, you will work with a licensed structured settlement broker, a professional who administers settlement payments according to the agreed-on schedule. You can find a list of licensed structured settlement brokers on the website of the Civil Division of the U.S. Department of Justice.
If you or a loved one needs legal representation after a serious injury accident in New Jersey, contact Mallon & Tranger for a free consultation.